Commodities | Jan 19 2016
By Rudi Filapek-Vandyck
With most utilities having already satisfied their short term procurement requirements by the close of November, global trading in uranium fell into a funk in December. TradeTech's spot price indicator fell by no less than seven percent during the week ending December 18; down US$2.50 to US$33.50/lb as buyers started clearing their desk but sellers tried desperately to offload some more produce before the end of calendar year festivities and holidays.
On the industry consultant's insights, most utilities won't be returning until after January. On top of this, the focus of the majority of market participants is on meetings of the World Nuclear Association in London and the Nuclear Energy Institute in Washington, DC.
Since that week of desperation in mid-December, spot uranium prices have steadily added small gains each week. Last week, up to Friday 15th January saw US$0.25 being added to take the price back to US$34.75/lb. This remains short of the spot price prior to mid-December, but at least uranium has escaped the global sell-off that has gripped risk assets, and commodities in particular, throughout the two opening weeks of calendar 2016.
Moreover, TradeTech reports countries scaling back on their coal usage are increasingly signalling that uranium is likely to be one of the beneficiaries. Apart from China, both Nigeria and Kenya are contemplating plans for the inclusion of nuclear in the local energy mix.
On TradeTech's observation, January's buying interest stems from a combination of traders taking positions as well as the emergence of new demand from non-US utilities. Offers were due last week to a non-US utility seeking 780,000 pounds U3O8 for spot delivery. One non-US utility awaits offers for 850,000 pounds U3O8 equivalent contained in UF6.
The week saw four transactions being concluded, involving just over 1.1 million pounds U3O8 for delivery in 2016. Traders and intermediaries concluded the purchases, reports Tradetech, with producers and intermediaries acting as sellers.
TradeTech's mid-term price indicator fell to US$36/lb in December and has not recovered as yet. The long term price indicator remains at US$44/lb.
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